INCOME TAX ACT, 1961

Section 45

Capital gains - Sale of land - Valuation for the purpose of capital gain - Accepted in past years

Assessee along with others had owned an inherited property. All the co-owners have constructed a residential complex on land in accordance with terms and conditions of agreement and sold flats which came to their possession as their individual share. Capital gains which arose from the sales were declared. Assessee, for the purpose of capital gains, had shown the fair market value as per the report of valuer. AO was of the opinion that fair market value declared by assessee was on the higher side as the land was situated in an underdeveloped area. Finally, AO concluded the assessment by adopting fair market value so determined and reworked the capital gains and made certain disallowances. CIT(A) and Tribunal partly allowed the appeal. Held: When the valuation for purpose of capital gains in the returns filed over a period of years, is accepted by the authorities, they cannot refuse to accept the same for consequent years, was not adverted to by authorities under the Act. The substantial question of law framed was answered in favour of assessee subject to condition that valuation report was accepted in scrutiny assessment at the instance of the assessee and matter was remitted back to AO to decide the issue with regard to valuation for the purpose of capital gains.

REFERRED :

FAVOUR : In assessee's favour by way of remand

A.Y. :

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